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Enhancing Technology-Based Agriculture and Marketing in Rural Punjab Technical Assistance Consultant’s Report Project Number: 52232-001 April 2020 Islamic Republic of Pakistan: Enhancing Technology-Based Agriculture and Marketing in Rural Punjab Prepared Dr. Shahid Ahmad, Mr. Sahibzada Mansoor Ali, and Dr. Babur Wasim Arif Islamabad, Pakistan For Asian Development Bank and the Punjab Agriculture Department This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. ADB TA 9838-PAK: Enhancing Technology-Based Agriculture and Marketing in Rural Punjab COVID-19 Impact Update on Agriculture and Food Security in Pakistan Bulletin Issue No. 1 as of 30 April 2020 Highlights: Development partners including the Asian Development Bank, International Fund for Agricultural Development, the World Bank, United States Agency for International Development , United Nation agencies (Food and Agriculture Organization, United Nations Children's Fund, World Food Programme, etc.), and other international institutions have taken serious note of impact of COVID-19 on health; food security; agriculture; water, sanitation and hygiene (WASH); and water availability for agriculture in Pakistan. The federal government and institutions of Pakistan are also responding to the call of the Prime Minister of Pakistan to look into ways to minimize COVID-related impact and losses in the country’s economy. The Pakistan Institute of Development Economics has initiated substantial work on impacts of COVID-19 on various sectors of the economy. The State Bank Pakistan undertook number of actions to revise the monitory policy in terms of interest rate and supporting financial institutions for improving their performance including the online banking. They are providing economic data on daily, weekly and monthly basis. The Institute of Policy Studies of Islamabad has also initiated a series of webinars involving policy options for the development sectors and has published its first report. The private sector industrial and business group Engro Pakistan completed an impressive study and described COVID-19 scenarios and implications for Pakistan for the major development sectors. ➢ Key Data National sources 1. Government of Pakistan. Coronavirus in Pakistan. Islamabad. The Government of Pakistan update on the COVID-19 situation in Pakistan as of 24 April 2020 highlighted the 11,155 confirmed cases. The active cases are 8,391, 237 deaths, and 2,527 recovered patients. The daily trend of new cases in 24 hours showed a higher rate of increase in last week, and is a clear indication that the next 2 weeks will be serious in Pakistan. The highest number of cases are in Punjab (4,767), followed by Sindh (3,671), Khyber Pakhtunkhwa (1,541), Balochistan (607), Gilgit-Baltistan [300], Islamabad (214), and Azad Jammu and Kashmir (55). 2. State Bank of Pakistan (SBP). Pakistan Economic Data. Karachi. United States (US) dollar-Pakistan rupees (PKR) exchange rate has fluctuated considerably since March 2020. At the start of the crisis, it reached to PKR169 due to impacts on reduction in exports and upcoming loan payments. Once the International Monetary Fund provided refinancing facility along with other donors, Pakistan rupees has strengthened (below PKR160 rupees) due to easing of pressure on external payments and impact of reduced imports. One of the immediate decisions by central bank at the start of the crisis was lowering of interest rates. Overall, the central bank base rate (policy rate) has been lowered by 425 basis points 2 ADB TA 9838-PAK: Enhancing Technology-Based Agriculture and Marketing in Rural Punjab to 9% over the past month. Consumer price index has been showing a downward trend over the past month. However, demand and supply disruptions may impact in multiple ways and oncoming data will be looked at closely to provide signs of changing trends. 3. Pakistan Bureau of Statistics. Weekly Sensitive Price Indicator (SPI) with base 2015-16. Islamabad. The sensitive price indicator (SPI) for the current week ended on 23 April 2020 recorded an increase of 0.62% over the last week. The increase in SPI is highest for lowest consumption quintile (i.e., 0.91%) and lowest for the upper consumption quintile (i.e., 0.52%). The increase in SPI is mainly due to a rise in prices of food items, i.e. Potatoes (24.75%), Onions (9.39%), Bananas (4.72%), Chicken (4.68%), Garlic (2.65%), Milk Fresh (1.33%), Rice IRRI (1.15%) and Curd (1.12%). 4. Punjab Agriculture Department. Agriculture Market Information System (AMIS)–Daily Price Trend of Major Agriculture Commodities n the Punjab. Lahore. April 2020. AMIS provides daily, monthly and annual data of agricultural markets comprising wholesale prices, arrival quantity in markets, support prices, cost of production, world crop data, international commodity prices, imports and exports, food processing, post-harvest practices, quality standards, and other related parameters. Average wholesale prices of most commodities in Punjab are significantly higher in 2020 compared to same period in the previous year (17 March–17 April 2019). However, this increase was established before the disruptions relating to COVID-19. No immediate impact on domestic prices is evident yet. While there were some disruptions at the start of the lockdown period, by and large wholesale agriculture markets have been functioning as normal. Individual market participants may still face transport and logistical issues that have an impact on price, quality, and quantity of produce reaching markets and consumers. 5. Pakistan Institute of Development Economics (PIDE). Pakistan COVID-19 Dashboard (Current State & Projection V6.0). Islamabad. April 2020. Agriculture is flagged as the sector with the highest vulnerability to the COVID-19 impact in terms of food security across all provinces of Pakistan, and the only sector to be rated as 90% vulnerable. The provincial level vulnerability is estimated as 87.7%, 84.6%, 94.7%, and 90.5% for Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan, respectively. PIDE also projects that due to COVID-19, the poverty rate will increase from 24.3% (baseline poverty) to 33.7% (in case of low impact scenario) followed by 44.2% (in case of medium impact scenario) and 55.9% (in case of high impact scenario). Apart from the poor, a bulk of population share falls in the category of vulnerable groups, whose income falls just above the poverty line. Longer economic recession would push these people into poverty International sources 6. Food and Agriculture Organization (FAO). Food Prices Monitoring and Analysis (FPMA) Bulletin # 3, 10 April 2020. International wheat prices are showing downward trend due to large global stocks and good global 2020 supply outlook despite Covid-19. The same pattern has been observed for maize, but rice has seen an upward trend from the second half of March 2020 due to disruptions in ADB TA 9838-PAK: Enhancing Technology-Based Agriculture and Marketing in Rural Punjab 3 Vietnam and Thailand. Pakistan domestic wheat flour: Moderate Price Warning. Upsurge in demand and transport disruptions related to the COVID-19 led to an increase in prices in the second half of the month. Harvest delays due to above-average rains throughout March, which also caused localized crop damages, provided further upward pressure. Prices remained well above their year-earlier levels and at near-record highs in some markets after the steady increases late last year and in January 2020 due to tight supplies. The bulk of the 2020 harvest is expected to reach the markets towards the end of April and the output forecast is 25.2 million tons, close to the average of the past five years. ➢ Reports and Analysis National sources 7. PIDE. COVID-19 E-Book. 15 April 2020. The COVID-19 outbreak has not impacted food prices yet, except for some stress on the prices of pulses. It is, however, too early to make any conclusions. The possible spread of the coronavirus to the rural areas and widening lockdowns may disrupt distribution channels affecting food prices. Pakistan has good storage facilities of grains and the new wheat crop is about to be harvested. There is no need to panic for an imminent risk to food security, but there is also no reason to be complacent either. If the COVID-19 pandemic does not last for too long, it is believed that there will have no major shortage of staple foods. If, however, the situation prolongs, it will impact perishable food items first and then the staple foods. Perishable food items are plucked, packed and shipped on daily basis, which demands continuity of farm labor supply and human-to-human interaction. 8. Engro Corporation Limited. COVID-19: Scenarios & Implications for Pakistan. Karachi. 8 April 2020. Agriculture gross domestic products can contract by 2%–7% with an impact of the losses of $1–4 billion based on compromised sowing in May 2020 and reduction in commodity prices. Agriculture is classified as the largest and most critical sector in terms of importance for daily functioning of society with medium potential of virus propagation. Agriculture imports will be down by 15%–20% with volume expected to go down by 5%–10% and price by 10%. With 24 million employed in agriculture, it is expected that 1 million will become unemployed during the suppression period (out of a total 15–20 million expected for the whole economy). In case of sustained disruption this could double for the sector. 9. Institute of Policy Studies. Tackling COVID-19: Policy Options for Pakistan, Pandemic Policy Monograph Series No. 1. Islamabad. 17 April 2020. The major loss will come from exports with the country taking a hit of $1.0–1.5 billion. Pakistan’s top export partners the US, United Kingdom, People’s Republic of China, and United Arab Emirates are facing problems, and even after the crisis blows over, export demand will continue to face compression.
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